SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
   [X]                   SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 1996
                                        OR
   [ ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                        THE SECURITIES EXCHANGE ACT OF 1934
                For the transition period from _____________ to _____________
                Commission File Number: 033-68444

                             WILLIAMS SCOTSMAN, INC.
             (Exact name of Registrant as specified in its Charter)

                Maryland                                  52-0665775
    (State or other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                   Identification No.)

         8211 Town Center Drive                              21236
          Baltimore, Maryland                             (Zip Code)
(Address of principal executive offices)
                      -

Registrants' telephone number, including area code:  (410) 931-6000
Securities registered pursuant to Section 12(b) of the Act:

     Title of each class            Name of each exchange on which registered
            None                                       None

           Securities registered pursuant to Section 12(g) of the Act:


                                      None

                                (Title of class)

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No__

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     The Registrant is a wholly-owned  subsidiary of Scotsman Holdings,  Inc., a
Delaware  corporation.  As of March 28,  1997,  Scotsman  Holdings,  Inc.  owned
3,320,000 shares of common stock ("Common Stock") of the Registrant.


<PAGE>

                                     PART I

Item 1.  Business

General

     Williams  Scotsman,  Inc.,  formerly  known as The  Scotsman  Group,  Inc.,
("Scotsman" or the "Company")  believes,  based upon management's  assessment of
the  industry,  it is the second  largest  lessor of mobile  office units in the
United States as ranked by lease fleet size and revenues.  The Company maintains
a fleet of  approximately  40,600 units which are leased through a network of 56
branch offices in 32 states. To a lesser extent,  the Company also sells new and
used mobile office units and sells and leases modular structures.  The Company's
products provide flexible, relocatable,  cost-effective and timely solutions for
space  requirements.   The  Company  has  over  12,500  customers  operating  in
approximately 450 diverse  industries  including  education,  utilities,  health
care, chemicals, engineering services and construction.

     The Company's primary business is the leasing of mobile office units. These
units  typically  range in size from eight to 14 feet in width and 16 to 70 feet
in length and are generally  constructed using a steel frame  undercarriage with
an exterior of wood or  aluminum.  The  Company has the  flexibility  to readily
adapt its lease fleet units to meet a wide variety of customer needs.  Units can
be configured using any combination of the Company's standard products which are
offered in a variety of sizes and floor plans.  The basic  functional  design of
mobile office units has remained virtually  unchanged since the inception of the
industry in the 1940s.  Mobile  office units are  extremely  durable and, due in
part to an active maintenance  program, the Company's units retain a significant
percentage of their  original  value.  The  Company's  lease fleet units have an
average age of approximately  eight years and an estimated  economic useful life
of approximately 20 years.

     To a lesser  extent,  the Company also sells,  leases and services  modular
structures,   which  compete  with  conventional  space  alternatives.   Modular
structures revenues represented less than 1% of total revenues in the year ended
December 31, 1996.  Each modular  structure  typically is three thousand  square
feet or more in size and  comprises  several  smaller  units which are assembled
into a single structure at the building site.  Modular  structures can generally
be dismantled and refurbished as individual  mobile office units and returned to
the Company's lease fleet.

     On December 16, 1993, Scotsman Holdings,  Inc. ("Holdings") acquired all of
the issued and outstanding  capital stock of the Company. In connection with the
acquisition  and related  refinancing  (the  "Acquisition"),  the Company issued
$165.0  million  aggregate  principal  amount of 9 1/2% Senior Secured Notes Due
2000 and entered  into a Loan and Security  Agreement  with  Congress  Financial
Corporation.  Upon consummation of the Acquisition,  the Company retired certain
existing  indebtedness  consisting of $175.0 million  principal amount of 11.31%
Senior Secured Notes and a $15.6 million senior secured credit facility.
<PAGE>

     The Company and its  predecessors  have  operated in the mobile  office and
modular  structures  industry  since 1945. In 1990 the Company more than doubled
its size through the combination of Scotsman  Manufacturing Co., Inc. ("Scotsman
Manufacturing") with Williams Mobile Offices, Inc. ("Williams"). Since 1990, the
Company has substantially  eliminated duplicate functions of the two predecessor
companies,  eliminated manufacturing operations, and repositioned the Company to
significantly  reduce its modular  structures  operations  and focus on its core
leasing  activities,  which accounted for  substantially  all of the total gross
profit in the year ended December 31, 1996.

     The Company  purchases its new units  through  third-party  suppliers.  The
Company believes there are numerous manufacturers and suppliers of mobile office
units and modular  structures which supply these products at competitive  prices
throughout the United States.  The Company  anticipates being able to procure an
adequate  supply of product on acceptable  terms for its  projected  operational
requirements.  The  Company  does  not  believe  that the loss of any one of its
suppliers would have a material adverse effect on its operations.

Recent Developments

     The Company has announced that its parent company, Scotsman Holdings, Inc.,
is considering various strategic alternatives,  including a sale of the Company.
In this connection,  Scotsman Holdings has retained Goldman,  Sachs & Co. as its
financial  advisor.  There  can be no  assurance  that any  transaction  will be
consummated.

Operating Strategy

     Due to the local and regional  nature of its business,  the Company's goals
are to become the leader in each of the local  markets in which it competes  and
to  expand  its  coverage  to  additional  local  markets.   To  achieve  market
leadership, the Company has implemented a strategy which emphasizes (i) superior
service,  (ii) a well maintained,  readily  available and versatile lease fleet,
(iii) effective fleet management using proprietary information systems, and (iv)
targeted marketing through an experienced and motivated sales force. The Company
believes  that  it  is  generally  the  first  or  second  largest  provider  of
relocatable  space in each of its  regional  markets as  measured by lease fleet
size and revenues.  The Company's branch offices are distributed  throughout the
United States and are located in the majority of the major metropolitan areas.

     To further its market  leadership,  expand its coverage to additional local
markets and leverage its existing cost structure,  the Company plans to continue
to capitalize on the industry's  fragmentation  by acquiring mobile office lease
fleets. During 1994, the Company acquired  approximately 5,500 units through the
acquisition of Mobile  Holdings,  Inc. ("MFO") in September and from other lease
fleet  acquisitions.  During  1995 and 1996,  the  Company  acquired  a total of
approximately  3,600 units through the acquisition of various lease fleets.  See


                                       2
<PAGE>

note 1 of Notes to Financial  Statements  included  elsewhere herein.  Increased
penetration in existing markets through  acquisitions of competitors  allows the
elimination of duplicate branch offices and overhead,  an expanded customer base
and facilitates  higher  profitability.  Expanded  coverage to additional  local
markets  allows the  Company to  capitalize  on  market-specific  opportunities,
diversify geographically and further leverage its cost structure.

Competition

     Although the Company's  competition  varies  significantly  by market,  the
mobile office and modular structure industry, in general, is highly competitive.
The  Company  competes  primarily  in terms of  product  availability,  customer
service and price. The Company believes that its reputation for customer service
and its ability to offer a wide selection of units suitable for many varied uses
at competitive prices allow it to compete effectively.  However,  certain of the
Company's  competitors are less leveraged,  have greater market share or product
availability  in a given market and have greater  financial  resources  than the
Company.

Employees

     At  December  31,  1996,  the Company  employed  607  persons.  None of the
Company's  employees  are  covered by a  collective  bargaining  agreement.  The
Company considers its relationship with its employees to be good.

Regulatory Matters

     The   Company   must  comply  with   various   federal,   state  and  local
environmental,  health and safety laws and  regulations  in connection  with its
operations.  The Company  believes  that it is in  substantial  compliance  with
applicable environmental, health and safety laws and regulations. In addition to
compliance  costs, the Company may incur costs related to alleged  environmental
damage  associated  with  past or  current  properties  owned or  leased  by the
Company. The Company believes that its liability,  if any, for any environmental
remediation will have no material adverse effect on its financial condition.

                                       3
<PAGE>

Item 2.  Properties

     The  Company's  headquarters  is a  three-story  modular  office  structure
located on 3.1 acres in suburban Baltimore,  Maryland.  The location,  ownership
status,  approximate  size and  primary  use of the  Company's  other  principal
properties are set forth in the table below.

<TABLE>
<CAPTION>

                             Ownership     Size
Location                      Status     In Acres       Primary Use
--------                      ------     --------       -----------
<S>                           <C>          <C>          <C>

Albuquerque, NM               Owned        2.0          Branch Office
Albuquerque, NM               Leased       1.7          Drop Lot
Allentown, PA                 Leased       4.8          Branch Office
Atlanta, GA                   Owned        6.2          Branch Office
Atlanta, GA                   Owned        30.82        Branch Office (future)
Baltimore, MD                 Owned        7.3          Branch Office
Berlin, NJ                    Owned        26.0         Branch Office
Birmingham, AL                Leased       4.9          Branch Office
Boise, ID                     Leased       2.0          Branch Office
Casper, WY                    Leased       2.0          Branch Office
Charles City, VA              Owned        9.2          Branch Office (future)
Charleston, SC                Leased       3.0          Branch Office
Charleston, SC                Owned        1.5          Branch Office
Charlestown, WV               Leased       10.5         Branch Office
Cherry Hill, NJ               Owned        4.3          Branch Office
Cherry Hill, NJ               Leased       18.6         Branch Office (future)
Cherry Hill (Mt. Laurel), NJ  Leased       7.5          Storage Lot
Cheshire, CT                  Leased       9.6          Branch Office
Chicago, IL                   Owned        6.5          Branch Office
Cincinnati, OH                Owned        6.2          Branch Office
Cleveland, OH                 Owned        8.0          Branch Office
Columbus, OH                  Leased       1.1          Branch Office
Dallas, TX                    Leased       4.4          Branch Office
Denver, CO                    Leased       4.0          Branch Office
Detroit, MI                   Leased       4.6          Branch Office
Durham, NC                    Leased       4.4          Branch Office
Ellwood City, PA              Leased       5.0          Storage Lot
Fresno, CA                    Leased       3.5          Branch Office
Ft. Lauderdale, FL            Leased       6.0          Branch Office
Ft. Myers, FL                 Owned        8.9          Branch Office
Ft. Myers, FL                 Owned        1.9          Storage Lot
Grand Junction, CO            Leased       0.65         Branch Office
Houston, TX                   Owned        7.87         Branch Office
Jacksonville, FL              Leased       2.3          Branch Office
Langhorne, PA                 Leased       *            Sales Office
Kansas City, MO               Leased       2.19         Branch Office
Irmo, SC                      Owned        5.0          Branch Office
Kingwood, TX                  Leased       *            Administrative Office
Kinston, NC                   Leased       3.0          Storage Lot


                                       4
<PAGE>

Lafayette, LA                 Leased       4.0          Branch Office
Las Vegas, NV                 Leased       2.5          Branch Office
Long Island, NY               Leased       3.1          Storage Lot
Louisville, KY                Leased       3.0          Branch Office
Manassas, VA                  Leased       2.7          Branch Office
Mira Loma, CA                 Leased       17.0         Branch/Storage
Mobile, AL                    Leased       3.0          Branch Office
New Orleans, LA               Leased       10.15        Branch Office
Norfolk, VA                   Leased       5.5          Branch Office (future)
North East, MD                Owned        33.1         Leased Property
Orlando, FL                   Leased       5.5          Branch Office
Orlando, FL                   Owned        4.0          Service Facility
Pelham, NH                    Owned        16.0         Branch Office
Phoenix, AZ                   Leased       2.2          Branch Office
Phoenix, AZ                   Leased       10.0         Branch Office (future)
Pittsburgh, PA                Leased       2.0          Branch Office
Portland, OR                  Leased       1.3          Branch Office
Richmond, VA                  Owned        6.6          Branch Office
Riverside, CA                 Leased       13.5         Branch Office
Rotterdam, NY                 Leased       2.1          Branch Office
Salt Lake City, UT            Leased       4.7          Branch Office
San Antonio, TX               Leased       2.6          Branch Office
San Diego, CA                 Leased       1.3          Branch Office
Santa Fe Springs, CA          Leased       16.5         Branch Office
Seattle, WA                   Leased       1.4          Branch Office
South Kearny, NJ              Leased       5.0          Branch Office
St. Charles, MO               Leased       2.5          Branch Office
Statesville, NC               Leased       3.0          Storage Lot
Syracuse, NY                  Leased       5.0          Branch Office
Tampa, FL                     Owned        4.8          Branch Office
Tulsa, OK                     Leased       2.1          Branch Office
Tulsa, OK                     Owned        4.3          Branch Office
Vacaville, CA                 Leased       11.0         Branch Office

*    Less than .1 acre.
     ---------------
</TABLE>

     The Company  believes  that its existing  owned and leased  facilities  are
adequate for its operations.


                                       5
<PAGE>

Item 3.  Legal Proceedings

     The Company is involved in certain  legal  actions  arising in the ordinary
course of business.  The Company  believes  that none of these  actions,  either
individually  or in the  aggregate,  will have a material  adverse effect on the
Company's business, results of operations or financial condition.

Item 4.  Submission of Matters to a Vote of Security Holders

     None.


                                       6
<PAGE>
                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Shareholder Matters

     There is no  established  public  trading  market for the Company's  Common
Stock. The Company is a wholly-owned  subsidiary of Scotsman  Holdings,  Inc., a
Delaware corporation.

     During 1996, the Company paid dividends to Holdings in the aggregate amount
of $2,070,000,  in accordance with provisions of the Note Indenture. The Company
does not  intend to pay any  further  dividends  in the  foreseeable  future but
reserves the right to do so.

     Pursuant to the Scotsman  Holdings,  Inc. 1994  Employee  Stock Option Plan
(the "Plan"),  options for 115,050  shares of Holdings were granted during 1996.
No shares of Holdings' common stock were issued during 1996 upon the exercise of
the options  previously granted under the Plan. This transaction was exempt from
the  registration  requirements  of the  Securities  Act of  1933,  as  amended,
pursuant to Section 4(2) thereunder.

                                       7
<PAGE>

                   ITEM 6. SELECTED HISTORICAL FINANCIAL DATA


The following tables summarize certain selected historical  financial data which
should be read in  conjunction  with  "Management's  Discussion  and Analysis of
Financial  Condition and Results of  Operations"  and the  Financial  Statements
appearing  elsewhere herein.  The selected  historical  financial data set forth
below for the fiscal years ended December 31, 1992,  1993,  1994,  1995 and 1996
and as of the end of each of such  periods  have been  derived  from the audited
Financial Statements.

<TABLE>
<CAPTION>
                                               Fiscal Years Ended (1)
                                    --------------------------------------------
                                      1992     1993     1994     1995     1996
                                      ----     ----     ----     ----     ----
                                               (Dollars in thousands)
Statement of Operations Data:
 Revenues:
<S>                                 <C>      <C>      <C>      <C>      <C>
  Leasing                           $ 72,744 $ 73,384 $ 79,342 $ 96,498 $116,769
  New units sales                     27,709   18,501   22,290   23,126   28,042
  Delivery and installation           28,369   24,237   26,511   28,162   32,767
  Other                                3,712    3,011    5,832   10,734   17,564
                                     -------  -------  -------  -------  -------
  Total                             $132,534 $119,133 $133,975 $158,520 $195,142
--------------------------------------------------------------------------------
Gross profit:
  Leasing                           $ 41,146 $ 39,340 $ 39,960 $ 49,978 $ 59,534
  New unit sales                       3,354    2,534    2,854    3,853    4,999
  Delivery and installation            4,874    3,363    4,942    6,114    7,520
  Other                                2,515    1,639    4,285    8,108   13,590
                                      ------   ------   ------   ------   ------
                  Total             $ 51,889 $ 46,876 $ 52,041 $ 68,053 $ 85,643
--------------------------------------------------------------------------------
Selling, general and administrative
  expenses                          $ 28,237 $ 24,264 $ 29,303 $ 36,295 $ 42,260
Restructuring costs (2)                1,921    6,082      912      ---      ---
Earnings (loss) from continuing
  operations before extraordinary item  (582)  (3,841)   1,072    4,559    9,195
Earnings (loss) from continuing
  operations before extraordinary
  item per common share                (0.17)   (1.15)    0.32     1.37     2.77
                                        ====     ====     ====     ====     ====
Ratio of earnings to fixed charges(3)   1.0x     0.7x     1.1x     1.3x     1.6x
--------------------------------------------------------------------------------
Balance Sheet Data (4):
Rental equipment, net               $209,388 $246,550 $283,181 $324,207 $356,183
Total assets                         263,287  295,882  335,633  383,679  428,697
Long-term debt                       191,019  176,408  206,346  242,695  268,753
Stockholder's equity                  17,585   56,877   57,949   62,508   69,633
--------------------------------------------------------------------------------
</TABLE>


                                       8
<PAGE>

(1)  On December 16, 1993,  Holdings purchased all of the issued and outstanding
     stock of Scotsman.  The  acquisition  was  accounted for under the purchase
     method of  accounting  by  Holdings,  and the Company  restated its balance
     sheet to "push down" the effects of the purchase accounting adjustments.

(2)  Restructuring  costs consist primarily of costs incurred in connection with
     the acquisition of Scotsman by Holdings in December 1993.

(3)  The ratio of  earnings  to fixed  charges is  computed  by  dividing  fixed
     charges into earnings from  continuing  operations  before income taxes and
     extraordinary  items plus fixed charges.  Fixed charges  include  interest,
     expensed or capitalized, including amortization of deferred financing costs
     and debt discount and the estimated interest component of rent expense.

(4)  Balance sheet data at December 31, 1993 reflect the acquisition of Scotsman
     by  Holdings  and  the  related  "push  down"  of the  purchase  accounting
     adjustments. See note (1) above.

                                       9
<PAGE>


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

     The following  discussion  regarding the financial condition and results of
operations  of the Company for the three  fiscal  years ended  December 31, 1996
should be read in conjunction  with the more detailed  information and Financial
Statements included elsewhere herein.

General

     The Company  derives its revenues and earnings from the leasing and sale of
mobile office units and modular  structures and their delivery and installation.
Leasing  operations  account for a majority of the Company's  revenues and gross
profits and are  primarily  comprised of the leasing of mobile  office units and
the sale of units from the Company's  lease fleet.  Used mobile office units are
sold by the Company in the ordinary course of its business at either fair market
value or pursuant to pre-established  lease purchase options. The Company's cash
flow from leasing  operations  is  favorably  affected by the sale of used units
from the Company's  lease fleet,  as the costs of such units generally have been
incurred in previous fiscal periods. Accordingly, the sale of used units results
in the availability of the total cash proceeds and the reporting of gross profit
on such sales.

     New unit sales  revenues are derived  from the sale of new mobile  offices,
similar  to those  units  rented by the  Company,  and from the sale of  modular
structures.  Revenues  from  delivery and  installation  result from  activities
related to the  transportation and installation of and site preparation for both
leased and sold  products.  Other  revenues  are derived from the sale of parts,
granting of insurance waivers,  rental and sale of steps and furniture and other
services provided by the Company.

     The Company's business is affected by the economic  conditions of the local
or regional  markets in which it operates.  Economic  conditions  have an impact
upon rental rates,  fleet utilization and new unit sales. The Company,  however,
believes that mobile office  leasing is less  affected by  unfavorable  economic
conditions  than its  other  operations  and that  during  periods  of  economic
uncertainty many businesses postpone or delay making major capital  expenditures
for space needs and  instead  choose the  flexibility  and lower cost of leasing
mobile offices.


                                       10
<PAGE>

Results of Operations

     Fiscal 1996 Compared With Fiscal 1995.  Revenues in fiscal 1996 were $195.1
million,  a $36.6 million or 23.1%  increase from revenues of $158.5  million in
fiscal 1995.  The increase  resulted from a $20.3  million or 21.0%  increase in
leasing revenue,  a $4.9 million or 21.3% increase in new sales revenue,  a $4.6
million or 16.4%  increase  in  delivery  and  installation  revenue  and a $6.8
million or 63.3% increase in other revenue.  The increase in leasing  revenue is
attributable  to a 10%  increase  in the average  lease  fleet to  approximately
38,600 units, an increase in the average fleet utilization of approximately four
percentage  points to 85% and an increase of $10 in the average  monthly  rental
rate.  The increase in new sales revenue is primarily due to the overall  branch
expansion that the Company has experienced during 1995 and 1996. The increase in
delivery  and  installation  revenue is  attributable  to the  increases  in the
leasing and new unit sales revenue described above. Other revenue increased as a
result of  increases  in the  rental of steps,  ramps and  furniture  as well as
miscellaneous revenue related to services provided for customer-owned units.

     Gross  profit in fiscal 1996 was $85.6  million,  a $17.6  million or 25.8%
increase  from  fiscal  1995 gross  profit of $68.1  million.  This  increase is
primarily  a result of an increase in leasing  gross  profit of $9.6  million or
19.1% and gross profit from other revenue of $5.5 million or 67.6%. The increase
in gross  profit from  leasing is a result of the  increase  in leasing  revenue
described above while the leasing profit margins dropped slightly.  This decline
in leasing  profit  margins is a result of the  increases  in  depreciation  and
amortization   expense   during   fiscal  1996.   Excluding   depreciation   and
amortization,  leasing margins increased from 76.1% for fiscal 1995 to 77.2% for
fiscal  1996.  The  increase in gross  profit  from other  revenue is due to the
increase in other revenue described above.

     Selling,  general and  administrative  (S,G&A)  expenses  increased by $6.0
million or 16.4% from fiscal 1995, primarily due to an increase in field related
expenses. This increase is a result of the branch expansion activity experienced
by the Company  during  fiscal 1995 and 1996 and is  comprised of a $3.6 million
increase  in  personnel  expenses  and a  $0.7  million  increase  in  occupancy
expenses.

     Interest  expense  increased by 14.7% to $25.8  million in fiscal 1996 from
$22.5  million  in fiscal  1995  primarily  as a result of the  increase  in the
average balances outstanding under the revolving line of credit. The increase is
due to  financing  the fleet  expansion  and growth  experienced  by the Company
during 1996.

     Fiscal 1995 Compared With Fiscal 1994.  Revenues in fiscal 1995 were $158.5
million,  a $24.5 million or 18.3%  increase from revenues of $134.0  million in
fiscal  1994.  The increase  resulted  primarily  from a $17.2  million or 21.6%
increase  in  leasing  revenue  and a $4.9  million or 84.1%  increase  in other
revenue.  The increase in leasing revenue is attributable to a 23.9% increase in
the average  lease fleet to  approximately  35,000 units,  while average  rental
rates declined slightly due to a change in the fleet mix and utilization dropped
slightly.  The increase in the fleet  reflects the  acquisition  activity by the


                                       11
<PAGE>

Company  during 1995 as well as general fleet  expansion.  The increase in other
revenue  is  due to the  overall  increases  in  revenue  enhancement  programs,
primarily  the  rental of steps,  as well as  miscellaneous  revenue  related to
services provided for customer-owned units.

     Gross  profit in fiscal 1995 was $68.1  million,  a $16.0  million or 30.8%
increase  from  fiscal  1994 gross  profit of $52.0  million.  This  increase is
primarily a result of an increase in leasing  gross  profit of $10.0  million or
25.1% and gross  profit from other  revenue  which  increased by $3.8 million or
89.2%.  The increase in gross profit from leasing is a result of the increase in
leasing  revenue  described  above as well as an increase in the leasing  profit
margin to 51.8% from 50.4% in 1994.  Excluding  depreciation  and  amortization,
leasing margins increased from 74.1% in fiscal 1994 to 76.1% in fiscal 1995. The
increase  in gross  profit  from other  revenue is due to the  increase in other
revenue described above.

     Selling,  general and  administrative  (S,G&A)  expenses  increased by $7.0
million or 23.9% from fiscal 1994.  This increase is comprised of a $5.1 million
increase in field related expenses,  a $0.8 million increase in expenses related
to the deferred  compensation  plan and a $1.1  million  increase in other S,G&A
expenses.  The increase in field  related  expenses is the result of lease fleet
acquisitions  and branch  expansion  activity  experienced by the Company during
fiscal 1995 and is comprised  primarily of a $3.9 million  increase in personnel
expenses and a $0.9 million increase in occupancy expenses.

     Interest  expense  increased  by 20.2% to $22.5  million in 1995 from $18.7
million in fiscal  1994  primarily  as a result of the  increase  in the average
balances  outstanding  under the  revolving  line of credit  during  1995.  This
increase is the result of financing fleet expansion and acquisitions made by the
Company.

Liquidity and Capital Resources

     During fiscal 1994,  1995,  and 1996,  the Company's  principal  sources of
funds  consisted of cash flow from  operating and financing  sources.  Cash flow
from  operating  activities  of $21.8  million in fiscal 1994,  $33.9 million in
fiscal  1995 and $46.0  million  in fiscal  1996 was  largely  generated  by its
leasing  operations  which  included  the  rental  and  sale of  units  from the
Company's  lease fleet.  Mobile  office  leasing  operations  have been the most
reliable source of the Company's cash flow.

     The Company has increased its EBITDA and believes that EBITDA  provides the
best indicator of its financial performance and provides the best measure of its
ability to meet historical debt service requirements. The Company defines EBITDA
as  net  income  before  depreciation,  amortization,  interest,  provision  for
deferred  compensation,  and income taxes. EBITDA as defined by the Company does
not  represent  cash flow from  operations  as  defined  by  generally  accepted


                                       12
<PAGE>

accounting  principles  and should not be considered as an  alternative  to cash
flow as a measure of liquidity, nor should it be considered as an alternative to
net income as an indicator of the Company's operating performance. The Company's
EBITDA  increased  by $18.8  million or 33.3% to $75.4  million  in fiscal  1996
compared to $56.6 million in fiscal 1995. This increase in EBITDA is a result of
increased leasing activity  resulting from the overall increase in the number of
units in the fleet and new unit sales  activity,  partially  offset by increased
SG&A expenses to support the increased activities during fiscal 1996.

     Cash flow used in investing  activities  was $46.7  million in fiscal 1994,
$68.0  million in fiscal 1995 and $70.0  million in fiscal 1996.  The  Company's
primary  capital  requirements  are for the  purchase of new units for its lease
fleet and units purchased through acquisition. The Company seeks to maintain its
lease fleet in good  condition at all times and generally  increases the size of
its lease fleet only in those local or regional  markets  experiencing  economic
growth. During fiscal 1994, 1995 and 1996, the Company  significantly  increased
its net  capital  expenditures  through  purchases  of new units for the  rental
fleet,   capital  improvements  and  betterments  for  existing  units  and  the
acquisitions of existing rental fleets including the acquisition of MFO in 1994,
increasing  the size of the rental  fleet by  approximately  8,000 units  during
1994,  4,000 units  during  1995 and 3,000 units  during  1996.  This  increased
activity was in response to increased  customer demand and the implementation of
the Company's acquisition strategy. The following table sets forth the Company's
investment in its lease fleet for the periods indicated.

<TABLE>
<CAPTION>

                                                      Fiscal Years Ended
                                                          December 31,
                                                          ------------
                                                  1994        1995         1996
                                                  ----        ----         ----
                                                       (Dollars in millions)

Gross capital expenditures for rental
equipment:
<S>                                              <C>          <C>         <C>
 Acquisitions..............................      $21.2        $25.0       $ 3.1
 New units and betterments.................       40.6         47.1        69.2
                                                  ----         ----        ----
                                                  61.8         72.1        72.3
Book values of sold, used units............       (6.4)        (7.7)       (9.7)
                                                  ----         ----        ----
Net capital expenditures for rental
 equipment.................................      $55.4        $64.4       $62.6
                                                  ====         ====        ====

Lease fleet maintenance expenses...........      $13.9        $15.3       $16.7
                                                  ====         ====        ====
</TABLE>

                                       13
<PAGE>

     The Company  believes it can manage its capital  requirements for its lease
fleet, and thus its cash flow, through the careful monitoring of its lease fleet
additions.  For instance,  the Company believes that during an economic downturn
it can sell used units while  limiting  additions to its lease fleet to maintain
cash flow.  Selling used units  during an economic  downturn may result in lower
sales prices for the Units.  During fiscal 1994,  1995 and 1996,  selling prices
for used units  (excluding  units sold  pursuant to purchase  options)  averaged
approximately 102%, 101% and 97%, respectively, of total capitalized cost of the
unit.  Such costs  include the cost of the unit as well as costs of  significant
improvements made to the unit. See further explanation below and note 2 of Notes
to Financial Statements.  Historically,  the Company has recognized net gains on
the sale of used units.

     Lease  fleet  maintenance  expenses  represent  the  costs  for  repairing,
refurbishing  and servicing used units and are included in the Company's cost of
leasing.  Generally, costs of improvements and betterments aggregating less than
$1,000 per unit are expensed as incurred.  Expenditures greater than $1,000 that
significantly extend the economic useful life of a unit or that materially alter
a  unit's   composition   are   capitalized.   The  Company's   maintenance  and
refurbishment  program is designed to help (i) maintain the value of lease fleet
units and (ii) realize  rental rates and  operating  cash flows from older units
comparable to those from newer units.  The sale of used units helps preserve the
overall high quality of the Company's lease fleet and enhances cash flow.

     Other capital expenditures of $1.2 million,  $6.9 million and $10.3 million
in  fiscal  1994,  1995  and  1996,  respectively,   consist  of  those  capital
expenditures for items not directly related to the lease fleet such as branch or
headquarters  equipment,   leasehold  improvements  and  management  information
systems.

     Cash  provided by financing  activities  was $24.2  million in 1994,  $33.8
million in 1995 and $23.9  million in 1996.  Cash flow was  generated  primarily
from  borrowings  of long-term  debt net of  repayments  thereon,  offset by the
dividends paid to Holdings.

     The Company's credit facility,  at December 31, 1996,  provides for a total
line of credit up to an aggregate principal amount of $120.0 million at any time
outstanding.  Effective  January 31, 1997,  the facility was amended to increase
the total line of credit to an aggregate principal amount of $140.0 million. The
credit facility has three components, as amended: (i) a revolving line of credit
in an aggregate  amount of up to $20.0 million at any one time outstanding to be
used by the Company for general  operating and working  capital  purposes of the
Company  and  other   corporate   purposes  (other  than   non-ordinary   course
acquisitions),  (ii) a line of credit in an amount of up to $110.0 million to be
used to  purchase  new  fleet or to pay the cash  purchase  price  (and  related
expenses) for future arm's length  acquisitions  of assets or stock of companies
in the same or  similar  businesses  as the  business  in which the  Company  is
currently  engaged  and (iii) a line of credit in an  aggregate  amount of up to
$10.0 million which may be used either for the purposes  described in subsection


                                       14
<PAGE>

(i) or subsection (ii) above at the Company's  option.  The credit facility,  as
amended,  matures  on  December  16,  1997,  is  secured  by  a  first  lien  on
substantially  all of the assets of the  Company and can be extended to December
16,  1998  at the  option  of  the  Company.  Approximately  $103.8  million  is
outstanding  under the credit facility at December 31, 1996. The credit facility
contains certain financial  covenants and provides for certain events of default
as are customarily contained in facilities of a similar type.

     Interest on the loans  under the credit  facility,  as amended,  is payable
monthly  at the rate of 0.25% per annum in excess of the prime rate from time to
time publicly  announced by Philadelphia  National Bank,  changing  monthly with
each  change in prime  rate or 2.50%  per  annum in  excess  of LIBOR,  with the
applicable rate to be selected at the option of the Company.

     The  Company  believes  it will have,  for the next 12  months,  sufficient
liquidity  under its credit  facility and from cash generated from operations to
meet its expected obligations as they arise.

Seasonality

     The  Company's  operations  are  somewhat  seasonal,  with  some  effect on
revenues but little or no seasonal effect upon earnings.

Inflation

     The Company  believes that  inflation has not had a material  effect on its
results of operations.  However,  an inflationary  environment  could materially
increase interest rates on the Company's  floating rate debt and the replacement
cost of units in the Company's lease fleet.  The price of used units sold by the
Company could also increase in such an environment. In addition, the Company may
seek to limit its exposure to interest rate  fluctuations  by utilizing  certain
hedging mechanisms, although it is under no obligation to do so.


                                       15
<PAGE>

Item 8.
                          INDEX TO FINANCIAL STATEMENTS

                                                                            Page
                                                                            ----

Independent Auditors' Reports..............................................  17

Consolidated Balance Sheets as of December 31, 1996 and 1995...............  19

Consolidated Statements of Operations for the years ended
  December 31, 1996, 1995 and 1994.........................................  20

Consolidated Statements of Changes in Stockholder's Equity
  for the years ended December 31, 1996, 1995 and 1994.....................  21

Consolidated Statements of Cash Flows for the years ended
  December 31, 1996, 1995 and 1994.........................................  22

Notes to Consolidated Financial Statements.................................  24

                     INDEX TO FINANCIAL STATEMENTS SCHEDULES

Schedule II - Valuation and Qualifying Accounts............................  51

     All  schedules  not listed have been omitted  because of the absence of the
conditions under which they are required or the required information is included
elsewhere in the financial statements or notes thereto.

                                       16
<PAGE>

                         Report of Independent Auditors


Board of Directors
Williams Scotsman, Inc.
(formerly The Scotsman Group, Inc.)

We have  audited  the  accompanying  consolidated  balance  sheets  of  Williams
Scotsman, Inc. (formerly The Scotsman Group, Inc.) and subsidiary as of December
31,  1996 and 1995,  and the  related  consolidated  statements  of  operations,
stockholder's  equity and cash flows for the years then  ended.  Our audits also
included the 1996 and 1995 financial  statement  schedule listed in the Index at
Item  14(a).  These  consolidated  financial  statements  and  schedule  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on the  consolidated  financial  statements  and  schedule  based on our
audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the 1996 and 1995 consolidated  financial statements referred to
above  present  fairly,  in all material  respects,  the  financial  position of
Williams Scotsman, Inc. (formerly The Scotsman Group, Inc.) and subsidiary as of
December 31, 1996 and 1995,  and the results of their  operations and their cash
flows for the years then ended in conformity with generally accepted  accounting
principles.  Also, in our opinion, the related 1996 and 1995 financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole,  presents  fairly in all material  respects the  information  set forth
therein.

                                             ERNST & YOUNG LLP




Baltimore, Maryland
January 24, 1997


                                       17
<PAGE>



                          Independent Auditors' Report
                          ----------------------------




The Board of Directors
Williams Scotsman, Inc.
(formerly The Scotsman Group, Inc.)

We have audited the accompanying  consolidated statement of operations,  changes
in stockholder's equity and cash flows of Williams Scotsman,  Inc. (formerly The
Scotsman Group, Inc.) and subsidiary  (Scotsman) for the year ended December 31,
1994.  These  consolidated   financial  statements  are  the  responsibility  of
Scotsman's  management.  Our  responsibility  is to  express an opinion on these
consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material respects,  the results of operations  and cash flows of
Williams  Scotsman,  Inc. (formerly The Scotsman Group, Inc.) and subsidiary for
the  year  ended  December  31,  1994  in  conformity  with  generally  accepted
accounting principles.

                                        KPMG PEAT MARWICK LLP



Baltimore, Maryland
March 10, 1995











                                       18
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                                      December 31,
                                                                               1996                 1995
                                                                        --------------------------------------
                                                                                    (In Thousands)
Assets
Cash, and temporary investments of $13 in 1996 and $263 in 1995
<S>                                                                            <C>                <C>
                                                                               $    351           $    679
Trade accounts receivable, net of allowance for doubtful accounts of
   $258 in 1996 and $447 in 1995 (Note 3)                                        23,145             17,372
Prepaid expenses and other current assets                                         9,295              7,048
Rental equipment, net of accumulated depreciation of $67,520 in 1996
   and $40,162 in 1995 (Note 3)                                                 356,183            324,207
Property, plant and equipment, net (Notes 2 & 3)                                 29,032             21,088
Deferred financing costs, net                                                     5,494              7,830
Other assets                                                                      5,197              5,455
                                                                        --------------------------------------
                                                                               $428,697           $383,679
                                                                        ======================================
Liabilities and stockholder's equity
Accounts payable                                                               $  9,826           $  6,667
Accrued expenses                                                                  8,924              8,114
Rents billed in advance                                                          10,621              9,809
Long-term debt (Note 3)                                                         268,753            242,695
Deferred compensation (Note 7)                                                    3,300              1,900
Deferred income taxes (Note 5)                                                   57,640             51,986
                                                                        --------------------------------------
   Total liabilities                                                            359,064            321,171
                                                                        --------------------------------------

Stockholder's equity:
   Common stock, $.01 par value.  Authorized 10,000,000 shares; issued
     and outstanding 3,320,000 shares                                                33                 33
   Additional paid-in capital                                                    56,844             56,844
   Retained earnings                                                             12,756              5,631
                                                                        --------------------------------------
Total stockholder's equity                                                       69,633             62,508
                                                                        --------------------------------------
                                                                               $428,697           $383,679
                                                                        ======================================
</TABLE>


See accompanying notes to consolidated financial statements.


                                       19
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>

                                                                      Year ended December 31
                                                                  1996         1995          1994
                                                              --------------------------------------
                                                             (In thousands except per share amounts)
Revenues
<S>                                                            <C>          <C>           <C>
Leasing                                                        $116,769     $ 96,498      $ 79,342
Sales of new units                                               28,042       23,126        22,290
Delivery and installation                                        32,767       28,162        26,511
Other                                                            17,564       10,734         5,832
                                                              --------------------------------------
       Total revenues                                           195,142      158,520       133,975
                                                              --------------------------------------

Cost of sales and services Leasing:
   Depreciation and amortization                                 30,588       23,417        18,804
   Other direct leasing costs                                    26,647       23,103        20,578
Sales of new units                                               23,043       19,273        19,436
Delivery and installation                                        25,247       22,048        21,569
Other                                                             3,974        2,626         1,547
                                                              --------------------------------------
       Total costs of sales and services                        109,499       90,467        81,934
                                                              --------------------------------------
       Gross profit                                              85,643       68,053        52,041
                                                              ------------------------------------

Selling, general and administrative expenses                      42,260      36,295        30,215
Other depreciation and amortization                                2,411       1,851         1,349
Interest, including amortization of deferred financing
   costs of $2,449, $1,601, and $1,439                            25,797      22,485        18,705
                                                              --------------------------------------
       Total operating expenses                                   70,468      60,631        50,269
                                                              --------------------------------------

       Income before income taxes                                 15,175       7,422         1,772
Income tax expense (Note 5)                                        5,980       2,863           700
                                                              --------------------------------------

       Net income                                               $  9,195    $  4,559      $  1,072
                                                              ======================================
       Net income per common share                              $   2.77    $   1.37      $   0.32
                                                              ======================================

</TABLE>

See accompanying notes to consolidated financial statements.


                                       20
<PAGE>

                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

           Consolidated Statements of Changes in Stockholder's Equity

<TABLE>
<CAPTION>

                                                 Additional
                                  Common Stock     Paid-in   Retained
                                 Shares  Amount    Capital   Earnings    Total
                               -------------------------------------------------
                                                    (In Thousands)

<S>                              <C>     <C>      <C>        <C>        <C>
Balance at December 31, 1993     3,320   $ 33     $56,844    $     -    $56,877
Net income                           -      -           -      1,072      1,072
                               -------------------------------------------------
Balance at December 31, 1994     3,320     33      56,844      1,072     57,949

Net income                           -      -           -      4,559      4,559
                               -------------------------------------------------
Balance at December 31, 1995     3,320     33      56,844      5,631     62,508
Dividends - $ .62 per share          -      -           -     (2,070)    (2,070)
Net income                           -      -           -      9,195      9,195
                               -------------------------------------------------
Balance at December 31, 1996     3,320   $ 33     $56,844    $12,756    $69,633
                               =================================================
</TABLE>


See accompanying notes to consolidated financial statements.



                                       21
<PAGE>

                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                       Year ended December 31
                                                     1996      1995       1994
                                                  ------------------------------
                                                           (In Thousands)

Cash flows from  operating activities
<S>                                               <C>        <C>        <C>
Net income                                        $  9,195   $ 4,559    $ 1,072
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Depreciation and amortization                     35,448    26,869     21,592
  Provision for bad debts                            2,209     1,509     1,207
  Deferred income tax expense                        5,654     2,763       600
  Provision for deferred compensation                1,400     1,375       525
  Gain on sale of rental equipment                  (2,618)   (2,080)   (1,620)
  Increase in net trade accounts receivable         (7,982)       (4)   (2,072)
  Other                                              2,721    (1,087)      513
                                                  -----------------------------
    Net cash provided by operating activities       46,027    33,904    21,817
                                                  -----------------------------

Cash flows from investing activities
Redemption of certificates of deposit                  250     1,255     1,267
Rental equipment additions                         (72,277)  (72,096)  (45,174)
Proceeds from sales of rental equipment             12,331     9,733     8,045
Purchase of property, plant and equipment, net     (10,284)   (6,871)   (1,286)
Net assets of business acquired, including rental
 equipment of $16,648 (Note 1)                           -         -    (9,538)
                                                  =============================
         Net cash used in investing activities    $(69,980) $(67,979) $(46,686)
                                                  =============================
</TABLE>


                                       22
<PAGE>

                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

                Consolidated Statements of Cash Flows (continued)

<TABLE>
<CAPTION>

                                                    Year ended December 31
                                                 1996        1995        1994
                                             -----------------------------------
                                                        (In Thousands)

Cash flows from financing activities
<S>                                          <C>          <C>         <C>
Proceeds from long-term debt                 $ 219,420    $ 204,389   $ 173,401
Repayment of long-term debt                   (193,362)    (168,040)   (148,968)
Increase in deferred financing costs              (113)      (2,555)       (281)
Cash dividends paid                             (2,070)           -           -
                                             -----------------------------------
Net cash provided by financing activities        23,875      33,794      24,152
                                             -----------------------------------
      Net decrease in cash                          (78)       (281)       (717)

Cash at beginning of period                         416         697       1,414
                                             ===================================
Cash at end of period                        $      338   $     416   $     697
                                             ===================================

Supplemental cash flow information:
 Cash paid for (received from) income taxes  $      110   $     (5)   $    (453)
                                             ===================================
 Cash paid for interest                      $   23,888   $  21,068   $  17,086
                                             ===================================
</TABLE>


See accompanying notes to consolidated financial statements.

                                       23
<PAGE>

                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

                   Notes to Consolidated Financial Statements

                (Dollars in thousands, except per share amounts)


1. Organization and Basis of Presentation

Williams Scotsman,  Inc. (the Company) is a wholly-owned  subsidiary of Scotsman
Holdings,  Inc.  (Holdings),  a corporation which was organized in November 1993
for the purpose of acquiring the Company.  The Company changed its name from The
Scotsman Group, Inc. to Williams Scotsman, Inc. effective January 1, 1997.

The operations of the Company  consist of the leasing and sale of mobile offices
and, to a lesser extent,  modular structures  (equipment) and their delivery and
installation.  Leasing  operations  account  for a  majority  of  the  Company's
revenues and gross profits and are primarily  comprised of the leasing of mobile
office and storage units and the sale of units from the Company's lease fleet.

1994 Acquisition

On September 14, 1994, the Company  purchased all of the  outstanding  shares of
common stock of Mobile Holdings,  Inc. (Mobile) for an aggregate cost of $9,538.
The  acquisition,  which was effective as of August 31, 1994,  was accounted for
under the purchase  method of accounting  and,  accordingly,  the total cost has
been  allocated to the assets  acquired and  liabilities  assumed based on their
estimated fair values as follows:

      Rental equipment                                           $ 16,648
      Property, plant and equipment                                 2,055
      Long-term debt assumed                                       (5,505)
      Deferred income taxes recorded                               (4,313)
      Other net liabilities assumed                                  (702)
                                                                 --------
      Net assets acquired                                           8,183
                                                                 --------

      Excess of cost over net assets acquired (goodwill)            1,355
                                                                 --------
      Total cost                                                  $ 9,538
                                                                 ========

The long-term debt was repaid  subsequent to the acquisition.  A deferred income
tax liability was recorded for the tax effect of  differences  between the bases
of Mobile's assets and liabilities for tax and financial reporting purposes.



                                       24
<PAGE>

                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)


1. Organization and Basis of Presentation (continued)

Unaudited pro forma results of operations  for the year ended  December 31, 1994
assuming  that the  acquisition  of Mobile had occurred on January 1, 1994,  are
presented below:

         Total revenue                                           $140,365
         Net income                                                 1,242
         Net income per share                                    $   0.37

The pro forma  results  include the  historical  accounts of the Company and the
historical   accounts  for  the  acquired   business  adjusted  to  reflect  (1)
depreciation  and  amortization  of  the  acquired   identifiable  tangible  and
intangible  assets based on the new cost basis of the acquisition,  (2) interest
on acquisition financing and (3) the elimination of non-recurring  expenses. The
pro forma results of operations are not necessarily indicative of actual results
which might have occurred had the operations and management teams of the Company
and the acquired company been combined in prior years.

Summary of Significant Accounting Policies

The accompanying  consolidated  financial statements include the accounts of the
Company and its wholly owned subsidiary.  Significant  intercompany accounts and
transactions have been eliminated in consolidation.

(a)    Use of Estimates

       The preparation of the financial  statements in conformity with generally
       accepted accounting  principles requires management to make estimates and
       assumptions that affect the amounts reported in the financial  statements
       and accompanying notes. Actual results could differ from these estimates.

(b)    Leasing Operations

       Equipment is leased generally under operating  leases and,  occasionally,
       under  sales-type  lease  arrangements.  Operating  lease terms generally
       range  from  3  months  to  36   months,   and   contractually   averaged
       approximately 12 months at December 31, 1996. Rents billed in advance are
       initially  deferred  and  recognized  as  revenue  over  the  term of the
       operating  leases.  Rental equipment is depreciated by the  straight-line
       method


                                       25
<PAGE>

                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)


1. Organization and Basis of Presentation (continued)

(b)    Leasing Operations (continued)

       using  an  estimated  economic  useful  life  of 10 to 20  years  and  an
       estimated  residual value of either $1,000 or 20%. Costs of  improvements
       and  betterments  are  capitalized,  whereas costs of replacement  items,
       repairs and  maintenance  are  expensed as incurred.  Costs  incurred for
       equipment to meet  particular  lease  specifications  are capitalized and
       depreciated  over the lease term.  However,  costs  aggregating less than
       $1,000 per unit are generally expensed as incurred.

(c)    Deferred Financing Costs

       Costs  of  obtaining  long-term  debt are amortized  over the term of the
       debt by the interest method.

(d)    Property, Plant and Equipment

       Depreciation  is computed  by the  straight-line  method  over  estimated
       useful lives ranging from 20 to 40 years for  buildings and  improvements
       and 3 to 12 years for furniture and equipment.
       Maintenance and repairs are charged to expense as incurred.

(e)    Income Taxes

       Deferred tax assets and  liabilities  are  recognized  for the  estimated
       future tax consequences attributable to differences between the financial
       statement  carrying  amounts of existing assets and liabilities and their
       respective tax bases.  Deferred tax assets and  liabilities  are measured
       using  enacted tax rates in effect for the year in which those  temporary
       differences  are  expected  to be  recovered  or  settled.  The effect on
       deferred  tax  assets  and  liabilities  of a  change  in  tax  rates  is
       recognized in income in the period that includes the enactment  date. The
       Company is  included  in the  consolidated  federal  income tax return of
       Holdings.  Income  taxes  are  included  in  the  accompanying  financial
       statements on a separate return basis.


                                       26
<PAGE>

                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)


1. Organization and Basis of Presentation (continued)

(f)    Earnings Per Share

       Earnings per share is computed based on weighted average number of common
       shares outstanding of 3,320,000 shares for 1996, 1995, and 1994.

2. Property, Plant and Equipment

Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>

                                                               December 31
                                                          1996            1995
                                                        ------------------------

Land                                                    $  6,889        $  5,018
<S>                                                       <C>             <C>
Buildings and improvements                                12,820          11,052
Furniture and equipment                                   13,870           7,428
                                                        ------------------------
                                                          33,579          23,498
Less accumulated depreciation                              4,547           2,410
                                                        ------------------------
Net property, plant and equipment                       $ 29,032        $ 21,088
                                                        ========================
</TABLE>

3. Long-Term Debt

Long-term debt consists of the following:
<TABLE>
<CAPTION>

                                                               December 31
                                                          1996            1995
                                                        ------------------------

<S>                                                     <C>             <C>
Borrowings under revolving credit facility              $103,753        $ 77,695
9.5% senior secured notes                                165,000         165,000
                                                        ------------------------
                                                        $268,753        $242,695
                                                        ========================
</TABLE>

The loan agreement for the revolving credit facility, as amended, provides for a
$120,000  revolving  credit facility which matures  December 16, 1997 and can be
extended  for an  additional  year at the  option of the  Company.  Interest  is
payable at a rate of either prime plus .25% or LIBOR plus 2.50% at the option of
the Company.  The weighted average interest rate was 8.18% at December 31, 1996.
Borrowings under the credit facility are secured by a first priority lien on and


                                       27
<PAGE>

                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)


3. Long Term Debt (continued)

security  interest in the Company's rental  equipment,  accounts  receivable and
property,  plant and equipment.  In addition to the restrictions and limitations
described under the note agreement,  the credit facility loan agreement requires
compliance with certain financial covenants including maintenance of minimum net
worth,  working  capital,   number  of  units  in  the  lease  fleet  and  fleet
utilization.

The 9.5% senior  secured notes are due December 15, 2000 with  interest  payable
semi-annually  on June 15 and December 15 of each year. On or after December 15,
1997,  the notes are  redeemable  at the option of the  Company,  at  redemption
prices of 103.167% and 101.583% during the 12 month periods  beginning  December
15,  1997  and  1998,  respectively,  and  100%  thereafter  (subject  to  price
adjustment  under certain  events).  Upon the occurrence of a change of control,
the holders of the notes have the right to require the Company to repurchase the
notes at a purchase  price of 101%.  The notes are secured by a second  priority
lien on and  security  interest in the  collateral  under the  revolving  credit
facility loan  agreement.  The note agreement  limits or restricts the Company's
ability  to  incur  additional   indebtedness,   issue  preferred  stock,   make
distributions of capital in an amount not to exceed 50% of accumulated earnings,
dispose of  property,  incur liens on property  and merge with or acquire  other
companies.

At  December  31,  1996  and  1995,   the  fair  value  of  long-term  debt  was
approximately  $274,000 and $246,000,  respectively,  based on the quoted market
price of the senior  secured  notes and the book value of the  revolving  credit
facility, which is an adjustable rate note.

4. Obligations of Parent Company

On March 2, 1994,  Holdings  completed a private  placement of 21,250 securities
consisting of $21,250 principal amount of 11% Series A senior notes due March 1,
2004 and 173,648 shares of Holdings common stock.  The common stock was assigned
a value of $2,042 based on a per share price of $11.76.  The remaining  proceeds
of $19,208  were  assigned to the notes.  The discount on the notes of $2,042 is
being accreted over the maturity period. The proceeds of this offering were used
to retire  unsecured  convertible  notes payable to a stockholder of Holdings of
$20,000.  Interest on the 11% notes is payable semi-annually in additional notes
or cash through March 1, 1999, and payable in cash thereafter.  Holdings elected
to pay all interest  payments due under the notes in  additional  notes  payable
aggregating $6,514.  These notes bear interest at 11% and are due March 1, 2004.


                                       28
<PAGE>

                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)


4. Obligations of Parent Company (continued)

On or after March 1, 1999, the notes are redeemable at the option of Holdings at
redemption  prices of 104.125%,  102.750% and 101.375%,  during the twelve month
periods  beginning  March  1,  1999,  2000  and  2001  respectively,   and  100%
thereafter. Upon the occurrence of a change in control, the holders of the notes
have the right to require  Holdings to repurchase  the notes at a purchase price
of 101%.

Effective,  August 12, 1994, Holdings completed the registration of 11% Series B
notes.  Such notes have been exchanged for all of the  outstanding  11% Series A
senior notes. The form and terms of the Series B notes are identical to the form
and  terms  of the  Series A notes  except  that the  Series B notes  have  been
registered  under the  Securities  Act of 1933, as amended,  and do not bear any
legends restricting the transfer thereof.

The Holdings  notes are not secured by the Company's  assets or common stock and
the Company has no plans to assume or  otherwise  become  liable with respect to
the notes.

5. Income Taxes

Deferred income taxes related to temporary  differences between the tax bases of
assets and  liabilities  and the  respective  amounts  reported in the financial
statements are summarized as follows:

<TABLE>
<CAPTION>
                                                                 December 31
                                                               1996        1995
                                                             -------------------
Deferred tax liabilities:
Cost basis in excess of tax basis of assets and
 accelerated tax depreciation:
<S>                                                          <C>         <C>
   Rental equipment                                          $94,050     $86,718
   Property, plant and equipment                                 983         983
                                                             -------------------
       Total deferred tax liabilities                         95,033      87,701
                                                             -------------------
Deferred tax assets:
Allowance for doubtful accounts                                  100         177
Rents billed in advance                                        3,317       2,759
Pre-acquisition separate company net operating
 loss carryovers                                              25,816      26,273
Net operating loss carryovers                                  3,547       2,728
Alternative minimum tax credit carryovers                      1,465       1,296
Investment tax credit carryovers                                 860         860
Other                                                          2,288       1,622
                                                             -------------------
       Total deferred tax assets                              37,393      35,715
                                                             -------------------
Net deferred tax liabilities                                 $57,640     $51,986
                                                             ===================
</TABLE>



                                       29
<PAGE>

                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)


5. Income Taxes (continued)

In December 1993, Holdings purchased all of the issued and outstanding shares of
common stock of the Company.  For financial statement purposes,  the acquisition
was accounted for under the purchase  method of accounting by Holdings,  and the
Company  restated  its balance  sheet to "push down" the effects of the purchase
accounting  adjustments.  In connection with the acquisition of the Company, the
tax bases of the assets and  liabilities of the Company prior to the acquisition
are carried over and continue as the tax bases of the Company.  As a result, the
Company recorded deferred income tax liabilities of $13,455 representing the tax
effect  of the  differences  between  such tax  bases  and the  related  amounts
recorded as the cost of the acquisition for financial reporting purposes.

At December 31, 1996,  the Company had net operating loss  carryovers  available
for  federal   income  tax   purposes  of   approximately   $76,120,   including
pre-acquisition  separate  company loss carryovers  available for federal income
tax purposes of  approximately  $67,315 and investment tax credit  carryovers of
approximately  $860. These carryovers expire at various dates from 2000 to 2009.
Also,  alternative  minimum tax credit  carryovers of  approximately  $1,465 are
available  without  expiration  limitations.   The  annual  utilization  of  the
preacquisition  net operating loss carryovers is subject to certain  limitations
under the Internal Revenue Code.

The income tax expense consists of the following:

<TABLE>
<CAPTION>
                                                      Years ended December 31
                                                    1996        1995       1994
                                                   -----------------------------

<S>                                                <C>         <C>         <C>
Current                                            $   326     $   100     $ 100
Deferred                                             5,654       2,763       600
                                                   -----------------------------
                                                   $ 5,980     $ 2,863     $ 700
                                                   =============================

Federal                                            $ 5,145     $ 2,453     $ 600
State                                                  835         408       100
                                                   -----------------------------
                                                   $ 5,980     $ 2,863     $ 700
                                                   =============================
</TABLE>



                                       30
<PAGE>

                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)


5. Income Taxes (continued)

The provision for income taxes is reconciled to the amount  computed by applying
the Federal corporate tax rate of 34% to income before income taxes as follows:

<TABLE>
<CAPTION>
                                                         Years ended December 31
                                                        1996      1995      1994
                                                      --------------------------

<S>                                                   <C>        <C>        <C>
Income tax at statutory rate                          $5,311     $2,524     $602
State income taxes, net of federal tax benefit           543        308       66
Other                                                    126         31       32
                                                      --------------------------
                                                      $5,980     $2,863     $700
                                                      ==========================
</TABLE>



6. Commitments

The  Company  is  obligated  under  noncancellable  operating  leases of certain
equipment, vehicles and parcels of land. At December 31, 1996 approximate future
minimum rental payments are as follows:

         1997                                                      $1,525
         1998                                                         883
         1999                                                         758
         2000                                                         495
         2001 and thereafter                                          126
                                                                   -------
                                                                   $3,787
                                                                   =======

Rent expense was $2,875 in 1996, $2,605 in 1995 and $2,288 in 1994.

7. Employee Benefit Plans

The Company has adopted a defined  contribution  plan (the 401(k) Plan) which is
intended  to satisfy the tax  qualification  requirements  of  Sections  401(a),
401(k),  and 401(m) of the Internal  Revenue Code of 1986 (the Code). The 401(k)
Plan covers  substantially all employees and permits  participants to contribute
the lessor of (i) 15% of their annual compensation from the Company and (ii) the
dollar  limit  described  in Section  402(g) of the Code  ($9,500 in 1996).  All
amounts under this salary reduction feature are fully vested.


                                       31
<PAGE>

                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)


7. Employee Benefit Plans (continued)

The 401(k) Plan has a "matching"  contribution  feature  under which the Company
may contribute a percentage of the amount deferred by each participant. The Plan
also has a "profit sharing" feature, under which the Company may contribute,  at
its  discretion,  an  additional  amount  allocable  to the  accounts  of active
participants meeting the aforementioned eligibility requirements.

Contributions by the Company to the 401(k) Plan were approximately $243 in 1996,
$129 in 1995, and $54 in 1994.

The  Company  recorded  $1,800,   $1,775,  and  $925  of  management   incentive
compensation  in  1996,  1995,  and  1994   respectively,   including   deferred
compensation  of $1,400 in 1996,  $1,375 in 1995 and $525 in 1994, in connection
with the Incentive  Compensation Plan (the Plan). The Plan covers  approximately
40  management  members of the Company.  Under the terms of the Plan,  incentive
compensation is payable  annually to members of the Plan, based upon the Company
achieving certain earnings before interest, income taxes, provision for deferred
compensation,  depreciation and amortization  (EBITDA) targets. In addition,  if
certain  cumulative  EBITDA  targets  are met over the five year  period  ending
December 31, 1998, additional compensation will be payable in 1999.

In  March  1995,  the  Company  adopted  a stock  option  plan for  certain  key
employees.  Under the plan, employees may be granted options to purchase up to a
total of 7.5% of Holdings'  outstanding  common  stock.  The options are granted
with an  exercise  price equal to the fair value of the shares as of the date of
grant.  The options  vest ratably over 5 years and expire 10 years from the date
of the grant.  The Company  accounts for stock option grants in accordance  with
APB  Opinion  No.  25,   "Accounting  for  Stock  Issued  to  Employees",   and,
accordingly, recognizes no compensation expense for the stock option grants.

Pro forma information regarding net income and earnings per share is required by
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation,"  and has been  determined as if the Company had accounted for its
employee  stock options under the minimum  value method of that  Statement.  The
minimum  value  for  these  options  was  estimated  at the  date  of  grant  by
calculating  the excess of the fair value of the stock at the date of grant over


                                       32
<PAGE>

                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)


7. Employee Benefit Plans (continued)

the present value of both the
exercise price and the expected dividend  payments,  each discounted at the risk
free rate, over the expected exercise life of the option. The following weighted
average assumptions were used for 1996 and 1995:  risk-free interest rate of 6%;
weighted average expected life of the options of 5 years; and no dividends.

For  purposes  of pro forma  disclosures,  the  estimated  minimum  value of the
options is amortized to expense over the options' vesting period.  Note that the
effects of applying  SFAS 123 for pro forma  disclosure  in the current year are
not necessarily representative of the effects on pro forma net income for future
years. The Company's pro forma information follows:

<TABLE>
<CAPTION>
                                                             1996         1995
                                                          ----------------------

<S>                                                        <C>           <C>
Pro forma net income                                       $9,076        $4,543
Pro forma earnings per share                               $ 2.73        $ 1.37

</TABLE>

A summary of stock option  activity and related  information for the years ended
December 31 follows:

<TABLE>
<CAPTION>
                                              1996                    1995
                                      ------------------------------------------
                                                Weighted                Weighted
                                                Average                 Average
                                                Exercise                Exercise
                                      Options    Price        Options    Price
                                      -------------------     ------------------

<S>                                   <C>         <C>         <C>         <C>
Beginning balance                      38,200    $13.78            -           -
Granted                               115,050     28.80       38,200      $13.78
Exercised                                   -         -            -           -
Forfeited                             (2,200)     20.61            -           -
                                      ------------------------------------------
Ending balance                        151,050    $25.12       38,200      $13.78

Exercisable at end of year             37,610    $22.89        7,640      $13.78

Weighted  average  minimum  value
 of options granted during year
                                                 $ 7.28                   $ 3.48

</TABLE>



                                       33
<PAGE>

                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)


7. Employee Benefit Plans (continued)

Exercise  prices for options  outstanding as of December 31, 1996 are $13.78 and
$28.80. The weighted-average remaining contractual life of those options is 8.75
years.

8. Related Party Transactions

In  connection  with the  acquisition  of the Company by  Holdings,  the Company
entered  into  a  management  agreement  with  a  subsidiary  of  the  principal
stockholder  of Holdings.  The  agreement  provides that the Company will pay an
annual fee of up to $250 in consideration for certain management, consulting and
financial  advisory  services.  The Company incurred  expenses of $250 for these
services in 1996, 1995 and 1994.

9. Other

Holdings is considering various strategic alternatives,  including a sale of the
Company. There can be no assurance that any transaction will be consummated.


                                       34
<PAGE>

Item  9.  Changes  in and  Disagreements  With  Accountants  on  Accounting  and
          Financial Disclosure

     None.


                                       35
<PAGE>


PART III

Item 10. Directors and Executive Officers of the Registrant

Directors and Officers

     The Company's directors and executive officers are as follows:

Name                         Age                  Position
----                         ---                  --------
Barry P.  Gossett..........  56  Chairman and Chief Executive Officer; Director
Gerard E. Holthaus.........  47  President and Chief Operating Officer; Director
Marietta F.  Adamo.........  46  Executive Vice President-- Administration
Stephen Berger.............  57  Director
Muzzafar Mirza.............  39  Director
Brian Kwait................  35  Director

--------

     The directors  are elected  annually and serve until their  successors  are
duly  elected and  qualified.  No director of the Company  receives  any fee for
attendance at Board of Directors meetings or meetings of Committees of the Board
of  Directors.  Outside  directors  are  reimbursed  for their  expenses for any
meeting attended.

     Executive officers of the Company are elected by the Board of Directors and
serve at the discretion of the Board of Directors.

     In addition to the executive  officers of the Company identified above, the
following persons are instrumental to the management of the Company:

Name                    Age                       Position
----                    ---                       --------
J.  Collier Beall....... 49  Senior Vice President and Southern Division Manager
Joseph F. Donegan....... 46  Senior Vice President and Northern Division Manager
James D.  Funk.......... 52  Vice President - Midwestern Regional Manager
Katherine K.  Giannelli. 36  Vice President and Controller
Robert W. Hansen........ 40  Vice President - Western Regional Manager
Gerard E. Keefe......... 40  Vice President - Fleet and Finance
William C. LeBuhn....... 34  Vice President -  Human Resources
John B. Ross............ 48  Vice President and Corporate Counsel
William H. Ryan......... 51  Vice President -  Customer Development Services
William J. Wyatt........ 57  Vice President -  Marketing and Sales Support
---------

     Mr.  Gossett was elected  Chairman and Chief  Executive  Officer in October
1995.  Prior to this, he served as President and Chief Executive  Officer of the
Company from 1990 to October 1995.  Mr. Gossett has been a director and employee



                                       36
<PAGE>

of the Company or its predecessor for over twenty-five years. Before joining the
Company,  Mr. Gossett was a partner at Buchanan and Company, a Washington,  D.C.
accounting  firm.  Mr.  Gossett was one of the founders of the Modular  Building
Institute, an industry trade group which represents 160 member companies.

     Mr.  Holthaus was appointed  President and Chief  Operating  Officer of the
Company  in  October  1995.  Prior to this,  he  served  as the  Executive  Vice
President,  Chief  Financial  Officer of the  Company  from June 1994 to October
1995. He has been a director of the Company since June 1994.  Before joining the
Company,  Mr.  Holthaus  served as Senior Vice President of MNC Financial,  Inc.
from April 1988 to June 1994.  From 1971 to 1988,  Mr.  Holthaus was  associated
with the accounting  firm of Ernst and Young  (Baltimore),  where he served as a
partner from 1982 to 1988.

     Ms. Adamo has been the Executive Vice President--Administration since 1990,
and was Vice  President of  Administration  of Williams  from 1988 to 1990.  Ms.
Adamo is responsible for corporate and branch office administrative services, as
well as the Company's Productivity Improvement initiatives.

     Mr.  Berger has been a director of the Company  since  December  1993.  Mr.
Berger  has been a General  Partner  of  Odyssey  Partners,  a private  New York
investment  firm,  since July 1993. From July 1990 to July 1993, he was employed
by General  Electric  Capital  Corporation,  most  recently  as  Executive  Vice
President and as Chairman of a subsidiary of such company.  From October 1985 to
June 1990,  he served as the  Executive  Director of the New York and New Jersey
Port  Authority.  Mr.  Berger is also a director of  Forstmann  & Co.  Inc.  and
Hugoton Energy Corporation.

     Mr. Mirza has been a director of the Company since December 1993. Mr. Mirza
has been a principal of Odyssey  Partners since July 1993. From May 1988 to June
1993,  he was  employed by General  Electric  Capital  Corporation,  as Managing
Director of Merchant Banking for the GE Capital  Corporate  Finance Group.  From
1983 to 1988, he was a Vice President of Marine Midland Bank,  N.A. Mr. Mirza is
also a director of JPS Textile Group, Inc.

     Mr. Kwait has been a director of the Company since December 1993. Mr. Kwait
has been a principal of Odyssey  Partners  since August 1989.  From July 1988 to
August 1989,  he was an  associate  with Bear,  Stearns & Company.  From 1986 to
1988, he attended the Wharton Business School at the University of Pennsylvania.
Mr. Kwait is also a director of CellNet Data Systems.

     Mr. Beall was appointed Senior Vice President and Southern Division Manager
in October 1996. In addition,  he serves as the Southeastern Regional Manager of
the  Company.  Mr.  Beall's   responsibilities  include  the  implementation  of
corporate  policies,  attainment  of  branch  profitability,  fleet  utilization
management and development of personnel.  Prior to joining Williams in 1977, Mr.



                                       37
<PAGE>

Beall was a Regional  Manager for Modular  Sales and  Leasing  Company  based in
Georgia.  Mr. Donegan was appointed Senior Vice President and Northern  Division
Manager in October 1996.  In addition,  he serves as the  Northeastern  Regional
Manager of the Company,  a position he has held since June 1994,  and also prior
to 1991. Mr. Donegan's  responsibilities include the implementation of corporate
policies,  attainment of branch profitability,  fleet utilization management and
development of personnel. Mr. Donegan has over 20 years of experience within the
industry.  From 1991 through May 1994, Mr.  Donegan held similar  positions with
Space Master Buildings, Kullman Industries and Bennett Mobile Offices.

     Mr. Funk is the  Midwestern  Regional  Manager of the Company.  Mr.  Funk's
responsibilities include the implementation of corporate policies, attainment of
branch profitability, fleet utilization management and development of personnel.
Prior to joining the Company in 1986,  Mr. Funk was a branch manager for IISCOM,
a distributor of computer products based in Florida.

     Ms.  Giannelli has served as  Controller  of the Company  since 1990,  with
responsibilities  for the Company's  accounting  department including regulatory
reporting.  Prior to joining the Company,  Ms. Giannelli was a Senior Manager of
KPMG Peat Marwick in Baltimore, Maryland where she had been employed since 1982.

     Mr. Hansen is the Western  Regional  Manager of the Company.  Mr.  Hansen's
responsibilities include the implementation of corporate policies, attainment of
branch profitability, fleet utilization management and development of personnel.
Prior to joining the Company in 1983, Mr. Hansen was General Manager of Duracite
Mfg., a cabinetwork and construction firm in the San Francisco Bay Area.

     Mr.  Keefe was  appointed  Vice  President,  Fleet and Finance in February,
1995, with  responsibilities  including overall fleet management and purchasing,
treasury functions,  planning and budgeting.  Prior to joining the Company,  Mr.
Keefe  was with The  Ryland  Group,  a  national  homebuilder  headquartered  in
Columbia,  Maryland,  from 1993 to 1995.  From 1991 to 1993, he was a management
consultant  serving  the  manufacturing,  distribution  and  financial  services
industries,  and from  1977 to 1991,  he was  with  Ernst & Young in  Baltimore,
Maryland, most recently as a Senior Manager.

     Mr. LeBuhn has served as Vice  President of Human  Resources  since January
1994. Mr.  LeBuhn's  responsibilities  include the management of human resources
related programs.  Prior to joining the Company,  Mr. LeBuhn was Human Resources
Manager for  Sherwin-Williams  Eastern  Division  from 1992 to January  1994 and
Director of Human Resources for Consolidated International Insurance Group, Inc.
from 1985 to 1992.

     Mr. Ross has been  Corporate  Counsel for the Company since  February 1995.
Prior to joining on, Mr. Ross was Corporate Counsel for MNC Leasing  Corporation



                                       38
<PAGE>

from 1983 to 1991 and Special Assets  Counsel for MNC Financial,  Inc. from 1991
to 1993.  He has engaged in the private  practice of law in both North  Carolina
and Maryland.

     Mr.  Ryan has served as Vice  President  of Customer  Development  Services
since October 1994,  responsible for the rental and sales of revenue enhancement
products to Scotsman's  existing customer base and national accounts.  From 1990
to 1994, Mr. Ryan was Vice President of Scotsman Buildings,  responsible for the
Company's  Modular  Structures  Division.  Prior to  joining  on,  Mr.  Ryan was
employed  as  Vice  President  of  Sales  for  Cardinal   Industries,   Inc.,  a
manufacturer and builder of modular buildings.


     Mr.  Wyatt has served as  Director of  Marketing  and Sales  Support  since
February  1994,  was  Director  of Sales and  Marketing  for the Mobile  Offices
Division from 1990 to 1994 and was National  Sales Manager of Williams from 1988
to 1990.  Before joining on, Mr. Wyatt operated W.J. Wyatt and Company,  Inc., a
consulting firm providing sales  development,  market  planning,  convention and
meeting management and publishing services.


                                       39
<PAGE>


Item 11.

Executive Compensation

                           Summary Compensation Table

     The  following  table  sets  forth  certain   information   concerning  the
compensation  for the last three completed fiscal years of the five highest paid
officers of the Company who received  total  compensation  in excess of $100,000
during    1996.
<TABLE>
<CAPTION>

                                                                                    Long Term
                                                                                   Compensation
                                                                                      Awards
                                                                                      ------
                                                                                    Securities
                                                              Annual Compensation   Underlying    All Other
                                                              -------------------   ----------    ---------
                                                        Year    Salary    Bonus       Options   Compensation
                                                        ----    ------    -----       -------   ------------
<S>                                                     <C>   <C>       <C>          <C>        <C>
Barry P.
Gossett Chairman and Chief Executive  Officer.......... 1996  $225,000  $51,000         ---     $ 20,374(2)
                                                        1995   205,770   51,000         ---       18,066(2)
                                                        1994   200,000   52,000         ---        3,287(2)

Gerard E. Holthaus
President and Chief Operating Officer.................. 1996   200,000   50,500      27,000(1)    15,422(2)
                                                        1995   180,769   50,500       7,800(1)    12,968(2)
                                                        1994    78,327   50,000         ---        8,297(2)

J. Collier Beall
Senior Vice President and Southern Division Manager.... 1996   216,881   20,000      10,000(1)     9,825(2)
                                                        1995   171,390   28,000       2,300(1)     7,200(2)
                                                        1994   155,901   23,750         ---        7,200(2)

Joseph F. Donegan
Senior Vice President and Northern Division Manager.... 1996   200,557   20,000      10,000(1)     9,625(2)
                                                        1995   148,635   25,000       1,950(1)     8,138(2)
                                                        1994    54,609   15,000         ---        3,600(2)

James D. Funk
Vice President - Midwestern Regional Manager........... 1996   147,357   20,000       7,000(1)     9,144(2)
                                                        1995   158,338   20,000       1,950(1)     7,875(2)
                                                        1994   166,018   21,875         --         7,450(2)

(1)  Represents  options granted to purchase shares of Holdings  pursuant to the
     Scotsman Holdings, Inc. 1994 Employee Stock Option Plan.

(2)  Represents  disability  insurance premium,  key man life insurance premium,
     car allowance or lease amounts and employer match under the 401(k) Plan.
</TABLE>


                                       40
<PAGE>

1994 Management Equity Offering

     In 1994,  certain  management  employees  were offered the  opportunity  to
purchase up to 1.6% of Holdings'  common stock at a purchase price of $11.76 per
share,  representing  fair market value of the shares.  A total of 54,082 shares
were offered and purchased under this plan. See a description of the restriction
on these shares in "Item 13 - Stockholders' Agreement".

Scotsman Holdings, Inc. 1994 Employee Stock Option Plan

     In March 1995, a stock  option plan was adopted for certain key  employees.
In February  1997,  options for 107,530  shares of Holdings  were  granted at an
offer price of $55.18 per share.  Under this plan,  certain key employees may be
granted  options  to  purchase  up to a total of 7.5% of  Holdings'  outstanding
common stock.  The options are exercisable for a period of 10 years from date of
grant and have a five year vesting schedule.

Long Term Incentive Plan

     The Company adopted a long term incentive plan (the "Incentive Compensation
Plan") under which certain management employees will be entitled to receive, for
each of fiscal years 1994 through 1998, cash compensation,  if certain operating
targets (EBITDA) are met. Each participant under the Incentive Compensation Plan
may be  entitled to an  additional  lump sum  payment  following  the end of the
Company's 1998 fiscal year,  depending on the extent to which cumulative  EBITDA
of the Company for the five year period  beginning  in fiscal 1994 and ending in
fiscal 1998 exceeds the EBITDA  target  amount for the same period.  In February
1997, $400,000 was paid to approximately 40 management  employees based upon the
Company's 1996 operating performance.

401(k)/Defined Contribution Plan

     On May 1, 1993 the Company adopted a defined contribution plan (the "401(k)
Plan")  which is  intended  to satisfy  the tax  qualification  requirements  of
Sections  401(a),  401(k),  and 401(m) of the Internal  Revenue Code of 1986, as
amended (the  "Code").  Each  employee of the Company who  completes one hour of
service  with the  Company is eligible to  participate  in the salary  reduction
feature of the 401(k) Plan. The 401(k) Plan permits  participants  to contribute
the lesser of (i) 15% of their annual compensation from the Company and (ii) the
dollar  limit  described  in Section  402(g) of the Code  ($9,500 in 1996).  All
amounts  deferred  under  the  401(k)  Plan's  salary  reduction  feature  by  a
participant are fully vested.

     The 401(k)  Plan has a  "matching"  contribution  feature  under  which the
Company may contribute a percentage of the amount  deferred by each  participant
who makes salary  reduction  deferrals to the 401(k) Plan, has been employed for



                                       41
<PAGE>

12 consecutive months by the Company,  completes 1,000 hours of service with the
Company  during the Plan year and is  employed by the Company on the last day of
the year.  This  percentage,  if any, is determined by the Board of Directors at
their discretion and is communicated to 401(k) Plan participants during the year
for which the matching contribution will be made. Matching contributions made on
behalf of a 401(k) Plan  participant are subject to a deferred  vesting schedule
based on the number of years a participant  has been employed by the Company.  A
participant becomes 20%, 40%, 60%, and 100% vested in the matching contributions
made to the 401(k) Plan on his or her behalf after  completion  of 2, 3, 4 and 5
years of service with the Company, respectively.

     The  401(k)  Plan  also has a "profit  sharing"  feature,  under  which the
Company  may  contribute,  in its  discretion,  an  additional  amount  which is
allocated to the accounts of active  participants  who have been employed for 12
consecutive  months by the Company,  who have  completed  1,000 hours of service
during the Plan Year and who are employed on the last day of the year,  based on
such participants' compensation for the year.

     A  participant's  401(k)  Plan  benefits  generally  are  payable  upon the
participant's death, disability, retirement, or other termination of employment.
Payments under the 401(k) Plan are made in a lump sum.

     In 1996,  the  Company  made  matching  contributions  to the  401(k)  Plan
participants in an aggregate amount of $242,913.

Compensation Committee Interlocks and Insider Participation

     No  director  or  executive  officer of the Company was or is a director or
executive officer of any corporation,  other than Holdings,  that has a director
or  executive  officer  who is also a director  of the  Company or a member of a
committee of the Board of  Directors.  During 1996,  no officers or employees of
the  Company   other  than  Messrs.   Gossett  and  Holthaus   participated   in
deliberations of the Company's Board of Directors  concerning  executive officer
compensation.


                                       42
<PAGE>


Item 12. Security Ownership of Certain Beneficial Owners and Management

     All of the issued and outstanding shares of Common Stock of the Company are
owned by Holdings.  The following table sets forth certain information regarding
the ownership of Holding's Common Stock as of the date of this Report by (i) all
persons owning of record or  beneficially  to the knowledge of the Company 5% or
more of the issued and outstanding Common Stock of Holdings,  (ii) each director
individually and (iii) all executive officers and directors as a group:

<TABLE>
<CAPTION>
                                                                      Percentage
     Name                                                 Shares         Owned
     ----                                                 ------         -----
<S>                                                     <C>              <C>
     Odyssey Partners, L.P. (1)
       Stephen Berger (2)
       Brian Wruble (2)
       Leon Levy (2)
       Jack Nash (2)                                    2,989,201(3)     88.6%
       Joshua Nash (2)
     31 West 52nd Street
     New York, New York  10019......................

     Barry P. Gossett (1)(4)........................      259,469         7.7%

     Gerard E. Holthaus (1)(4)......................       12,700         0.4%

     All executive officers and directors as a group    3,285,020        97.3%
     ---------------------
</TABLE>

(1)  Deemed a  beneficial  owner of the  Company's  Common  Stock by  virtue  of
     ownership of shares of common stock of Holdings,  the parent company of the
     Company.

(2)  The shares of common stock  beneficially  owned by Odyssey  Partners may be
     deemed  to be  beneficially  owned  by  the  general  partners  of  Odyssey
     Partners:  Stephen  Berger,  Brian Wruble,  Leon Levy, Jack Nash and Joshua
     Nash  (collectively,  the  "General  Partners"),  who will share voting and
     investing  control over such shares.  The General  Partners  disclaim  such
     beneficial  ownership.  The address of each of the General  Partners is the
     address of Odyssey Partners.

(3)  Does not include  shares  beneficially  owned by Mr.  Gossett,  as to which
     Odyssey  Partners has an irrevocable  proxy.  See "Item 13 -- Stockholders'
     Agreement."

(4)  Mr.  Gossett's  and Mr.  Holthaus'  address is the address of the Company's
     principal executive offices.


                                       43
<PAGE>

Item 13. Certain Relationships and Related Transactions

Odyssey Investors Management Agreement

     The Company and Odyssey  Investors,  Inc. ("Odyssey  Investors"),  a wholly
owned subsidiary of Odyssey Partners,  entered into a management  agreement (the
"Management Agreement"),  dated as of December 16, 1993, which provides that the
Company  will  pay  Odyssey  Investors  an  annual  fee  of  up to  $250,000  in
consideration of certain management, consulting, and financial advisory services
to be rendered by Odyssey Investors, until such time, if any, as the Company has
outstanding  publicly-held  shares of Common Stock.  The terms of the Management
Agreement  were not the  result  of arms'  length  bargaining  and have not been
reviewed as to fairness by any independent  party and no determination  has been
made as to whether the terms of the  Management  Agreement  were as favorable as
those which might have been  obtained  from  unaffiliated  parties.  The Company
incurred expense of $250,000 for these services in 1996.

Stockholders' Agreement

     Odyssey Partners,  the Management  Stockholders and the Company are parties
to an Amended and Restated Management Stockholders' and Optionholders' Agreement
dated as of June 6, 1994  (the  "Stockholders'  Agreement"),  which  amends  and
restates the Management  Stockholders' and Optionholders'  Agreement dated as of
November  9, 1993,  and which  contains  certain  rights and  restrictions  with
respect to the transfer of each Management Stockholder's shares of Common Stock.
The Stockholders' Agreement prohibits the transfer of any shares of Common Stock
by each Management Stockholder (other than sales required in connection with the
disposition  of all shares of Common  Stock  owned by Odyssey  Partners  and its
affiliates) until the earlier of fifteen months after an initial public offering
of the  equity  of the  Company  or the  day  after  Odyssey  Partners  and  its
affiliates  have  disposed  of more than  33-1/3% of the shares of Common  Stock
originally acquired by Odyssey Partners, and thereafter, the aggregate number of
shares which may be transferred by each  Management  Stockholder in any calendar
year (other  than  certain  required  sales) may not exceed 25% of the number of
shares acquired in connection with the Acquisition plus the number of any shares
acquired  pursuant to the exercise of stock purchase options.  In addition,  the
Stockholders' Agreement restricts the transfer of shares of Common Stock by each
Management  Stockholder  for a period of five years from the date of purchase of
such shares,  except certain  permitted  transfers and transfers  pursuant to an
effective  registration  statement  or in  accordance  with  Rule 144  under the
Securities  Act. Upon the  expiration of such five-year  period,  subject to the
foregoing  restrictions,  each  Management  Stockholder  may transfer his shares
after giving to Odyssey Partners and the Company, respectively, a right of first
refusal to purchase such shares.

     Each Management Stockholder has the right (and in limited circumstances the
obligation) to sell his shares in connection with certain dispositions of shares



                                       44
<PAGE>

by Odyssey  Partners and the right to cause his shares to be included in certain
registrations  of Common Stock on behalf of Odyssey  Partners.  Each  Management
Stockholder  has granted to Odyssey  Partners an irrevocable  proxy that permits
Odyssey  partners to vote his  shares.  In  addition,  upon  termination  of any
Management  Stockholder's  employment,  the  Company  may elect to require  such
Management Stockholder to sell to the Company all of his shares.



                                       45
<PAGE>

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

     (a)  Financial Statements and Financial Statement Schedules (1) and (2) See
          Index to Financial Statements and Supplemental  Schedules at Item 8 of
          this Annual Report on Form 10-K.

     (b)  Reports on Form 8-K filed in the fourth quarter of 1996.

          In a report on Form 8-K dated November 27, 1996, the Company  reported
          a change in the  Registrant's  name from The Scotsman  Group,  Inc. to
          Williams Scotsman, Inc., effective January 1, 1997.

     (c)  Exhibits

     Exhibit Number

     3.1  --  Certificate of Incorporation of Williams Scotsman, Inc.,
              as amended. (Incorporated by reference to Exhibit 3(i) of
              Form 8-K dated November 27, 1996).

     3.2  --  By-laws of Williams  Scotsman,  Inc. (Incorporated by
              reference to Exhibit 3.2 of Registration Statement on
              Form S-l, Commission File No. 33-68444).

     4.1  --  Indenture dated as of December 16, 1993 between
              The Scotsman Group, Inc. and Continental  Bank
              National Association, as trustee (Incorporated
              by reference to Exhibit 10.1 to the annual report
              on Form 10-K of The Scotsman Group, Inc.for the
              year ended December 31, 1993 (the "Scotsman 1993 10-K")).

     10.1 --  Loan and Security Agreement dated December 16, 1993
              between Congress Financial Corporation and
              The Scotsman Group, Inc. (Incorporated by reference
              to Exhibit 10.2 to the Scotsman 1993 10-K).

     10.2 --  Amendment No. 1 to Loan and Security  Agreement dated
              June 15, 1994 between Congress Financial Corporation
              and The Scotsman Group, Inc. (Incorporated by reference
              to Exhibit 10.2 to the annual  report on Form 10-K of


                                       46
<PAGE>

              The Scotsman Group, Inc. for the year ended December 31,
              1994 (the "Scotsman 1994 10-K")).

     10.3 --  Amendment No. 2 to Loan and Security Agreement dated
              September 14, 1994 between Congress Financial
              Corporation and The Scotsman Group, Inc. (Incorporated
              by reference to Exhibit 10.3 to the Scotsman 1994 10-K).

     10.4 --  Amendment No. 3 to Loan and Security Agreement dated
              March 24, 1995 between Congress Financial
              Corporation and The Scotsman Group, Inc. (Incorporated
              by reference to Exhibit 10.4 to the Scotsman 1994 10-K).

     10.5 --  Amendment No. 4 to Loan and Security Agreement dated
              March 28, 1995 between Congress Financial Corporation
              and The Scotsman Group, Inc. (Incorporated  by reference
              to Exhibit 10.5 to the annual report on Form 10-K of
              The Scotsman Group, Inc. for the year ended December 31,
              1995 (the "Scotsman 1995 10-K")).

     10.6 --  Amendment No.5 to Loan and Security  Agreement dated
              August 1, 1995 between Congress Financial Corporation
              and The Scotsman Group, Inc. (Incorporated by reference
              to Exhibit 10.6 to the Scotsman 1995 10-K).

     10.7 --  Amendment No.6 to Loan and Security Agreement dated
              October 13, 1995 between Congress Financial Corporation
              and The Scotsman Group, Inc. (Incorporated by reference
              to Exhibit 10.7 to the Scotsman 1995 10-K).

     10.8 --  Amendment No. 7 to Loan and Security  Agreement dated
              January 30, 1996 between Congress Financial Corporation
              and The Scotsman Group, Inc. (Incorporated by reference
              to Exhibit 10.8 to the Scotsman 1995 10-K).

     10.9 --  Amendment No.8 to Loan and Security Agreement dated
              September 30, 1996 between Congress Financial
              Corporation and The Scotsman Group, Inc.


                                       47
<PAGE>

     10.10 -- Amendment No. 9 to Loan and Security Agreement
              dated January 31, 1997 between Congress Financial
              Corporation and Williams Scotsman, Inc.

     10.11 -- Intercreditor Agreement dated December 16, 1993
              among The Scotsman Group, Inc., Congress Financial
              Corporation and Continental Bank National Association,
              as trustee (Incorporated by reference to Exhibit 10.3
              to the Scotsman 1993 10-K).

     10.12 -- Amended and Restated Management Stockholders'
              and Optionholders' Agreement dated as of June 6, 1994,
              amending and restating the Management Stockholders'
              and Optionholders' Agreement dated as of November 9,
              1993 by and among Scotsman Holdings, Inc., Odyssey
              Partners, L.P. and the parties identified as management
              stockholders on the signature pages thereto.
              (Incorporated by reference to Exhibit 10.4 of
              Registration Statement on Form S-l of Scotsman Holdings,
              Inc., Commission File No. 33-68444).

     10.13 -- Management Agreement, dated as of December 16, 1993
              between The Scotsman Group, Inc. and Odyssey Investors,
              Inc. (Incorporated by reference to Exhibit 10.5 of
              Registration Statement on Form S-l of Scotsman Holdings,
              Inc., Commission File No. 33-68444).

     10.14 -- Agreement, dated as of June 30, 1993 by and among
              The Scotsman Group, Inc., Simon E. Dragan and Whitley
              Manufacturing Co., Inc. (Incorporated by reference
              to Exhibit 10.6 of Registration  Statement on Form S-l,
              Commission File No. 33-68444).

     10.15 -- Supply Agreement, dated as of August 25, 1993, by
              and between Whitley Manufacturing Co., Inc. and
              The Scotsman Group, Inc.(Incorporated by reference
              to Exhibit 10.7 of Registration  Statement on Form S-l,
              Commission File No.3-68444).





                                       48
<PAGE>

     10.16 -- Scotsman Holdings, Inc. Employee Stock Purchase Plan.
              (Incorporated by reference to Exhibit 10.8 of
              Registration  Statement on Form S-l of Scotsman Holdings,
              Inc., Commission File No. 33-68444).

     10.17 -- Scotsman Holdings, Inc. 1994 Employee Stock Option Plan.
              (Incorporated by reference to Exhibit 10.11 of the Scotsman
              1994 10-K).

     12.   -- Statement regarding computation of ratios.

     21.   -- Subsidiaries of Registrant: Mobile Field Office Company



                                       49
<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed
on its behalf by the undersigned,  thereunto duly authorized.

                                            WILLIAMS SCOTSMAN, INC.


                                            By: /s/ Gerard E. Holthaus
                                                --------------------------
                                                Gerard E. Holthaus
                                                President

Dated:  March 28, 1997

     KNOW ALL MEN BY THESE PRESENTS,  that each person whose  signature  appears
below constitutes and appoints Gerard E. Holthaus,  his or her attorney-in-fact,
with the power of  substitution,  for him or her in any and all  capacities,  to
sign any amendments to this Report,  and to file the same with exhibits  thereto
and other  documents in connection  therewith,  with the Securities and Exchange
Commission,   hereby   ratifying   and   confirming   all  that   each  of  said
attorney-in-fact,  or his  substitute or substitute  or  substitutes,  may do or
cause to be done by virtue hereof.

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.

 Name                         Capacity                         Date
 ----                         --------                         ----


/s/ Barry P. Gossett          Chief Executive Officer          March 28, 1997
--------------------------    and Director
Barry P. Gossett


/s/ Gerard E. Holthaus        President, Chief Operating       March 28, 1997
--------------------------    Officer and Director
Gerard E. Holthaus


/s/ Katherine K. Giannelli    Controller                       March 28, 1997
--------------------------
Katherine K. Giannelli


/s/ Stephen Berger            Director                         March 28, 1997
--------------------------
Stephen Berger


/s/ Muzzafar Mirza            Director                         March 28, 1997
--------------------------
Muzzafar Mirza


/s/ Brian Kwait               Director                         March 28, 1997
--------------------------
Brian Kwait


                                       50
<PAGE>

                     WILLIAMS SCOTSMAN, INC. AND SUBSIDIARY

                 Schedule II - Valuation and Qualifying Accounts

                  Years ended December 31, 1996, 1995 and 1994

                                 (In thousands)
<TABLE>
<CAPTION>

                                               1996         1995          1994
                                               ----         ----          ----
Allowance for Doubtful Accounts:
<S>                                          <C>           <C>          <C>
 Balance at beginning of the period          $   447       $  444       $   416
 Provision charged to expense                  2,209        1,509         1,207
 Purchase of Mobile Holdings, Inc.               ---          ---            65
 Accounts receivable written-off (net of
           recoveries)                        (2,398)      (1,468)       (1,282)
                                               -----        -----         -----

 Balance at end of the period                $   258      $   447       $   406
                                               =====        =====         =====
</TABLE>


                                       51
<PAGE>


                              EXHIBITS TO FORM 10-K
                             WILLIAMS SCOTSMAN, INC.
                                  EXHIBIT INDEX

                                                                   Sequentially
                                                                     Numbered
Exhibit No.       Description of Document                              Page
-----------       -----------------------                              ----

10.9   --         Amendment No.8 to Loan and Security Agreement         53
                  dated September 30, 1996 between Congress
                  Financial Corporation and The Scotsman Group,
                  Inc.

10.10  --         Amendment No.9 to Loan and Security Agreement         56
                  dated January 31, 1997 between Congress
                  Financial Corporation and Williams Scotsman,
                  Inc.

12.    --         Statement regarding computation of ratios.            60












                                       52